The real problem here is runaway population growth. In California we've seen our population double in the last forty years or so, and there just isn't enough water in the American Southwest to accommodate that kind of growth.
And, let's start calling them what they are ... agribusinesses. "Farmers" are long gone from California's Central Valley.
Of course if 80% of the states water goes to farmers and you're 20% below normal, that means farmers have to be part of rationing. But do you really think there would be so much farming if we didn't have 20 million extra people here?
And farmers are not long gone from the Central Valley. Most farms are still family owned, they're just too large to be worked by one family. You can call it agribusiness if it makes you feel better to depersonalize them, but they're still farmers.
Urban water usage has remained steady at around 11% of the total despite population growth. Agricultural consumers use about 4x more water, and then export it out-of-state.
But all those people need to eat, so it's not like you can pretend twenty million people don't add to the demand for agricultural products.
Besides, if population was steady urban use would be 5.5%.
Those people need to eat, but it's not like 100% of the food grown in California is eaten in California, nor does California grow 100% of the food it consumes. California's growers are driven by the national food market, not the state food market.
If you’re forced to choose between the lesser of two evils, paying alfalfa farmers is where it’s at. Obviously better water management would be the sensible choice, but that hasn’t been on the table for decades.
This developed a problem as people were paid to not produce and when droughts happened, there was not enough food to go around - a critical failure for a civilization. A problem that is a relevant lesson today as politicians had used faulty economics to try to fix the problem.
Modern farm policy is wasteful, and deserves criticism, but it turned the problem on its head by subsidizing farmers to produce as much as possible. We've gone from occasionally starving to death to having medical problems from eating too much. A good problem to have.
That isn't really fair, there was a lot done. Desalination plants went up along the coast and rationing and conservation efforts went in to full-effect. The problem was that when the rainy season returned the desalination plants were spun down and people generally stopped caring as it was no longer an issue.